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For all the talk of “reciprocal tariffs”, the number of exemptions is massive.

For example Trump has set reciprocal tariffs on Canada at 35 percent and Mexico at 30 percent.

However, there are so many USMCA exemptions that the effective rate for Canada is 2.3 percent (up from 0.1 percent). The effective rate on Mexico is 4 percent (up from 0.3 percent).

In contrast, the effective rate on Japan rose from 1.4 percent to over 15.4 percent.

The EU effective rate is 8.5 percent up from 1.0 percent, but well under an agreed 15 percent.

It’s these exemptions that calmed the market from Trump’s initial reciprocal announcements.

PIIE Analysis

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Please consider Trump’s tariff revenue tracker: How much is the US collecting? Which imports are hit?

President Donald Trump’s tariffs are raising government revenues, but how much is the US Treasury actually collecting from US importers after the starts, stops, delays, exclusions, and other factors? And what products and countries are hit? This monthly tracker measures tariff revenues in practice over time.

Tariffs are taxes collected by the US government from US businesses when they import goods. The tariff revenues are expressed as a percentage of monthly total import values that US businesses pay (monthly tariff revenue divided by monthly import value, by category or country), including shipping and insurance. These percentages are generally lower than press reports of headline tariff rates because the headline rates do not take exemptions or delays into account. For example, in August 2025, Trump exempted aircraft from the general 15 percent tariff on imports from the European Union agreed at that time.

Trump claims that tariffs can make an outsize fiscal contribution. This claim can be put in perspective by comparing actual tariff revenues with the size of the projected budget deficit (figure 3). The Congressional Budget Office projected the federal budget deficit in fiscal year 2025 will be $1.9 trillion. As of June 2025, tariff revenues since January 2025 totaled $93.9 billion, contributing just 5 percent of the projected deficit. It is worth noting that federal revenues collected during the fiscal year-to-date (October 2024 to June 2025) are $254 billion higher than the same period in the previous fiscal year, while the federal deficit is $64 billion larger. But tariff revenues since January 2025 are still only 1.8 percent of the projected total federal revenue in fiscal year 2025 of $5.2 trillion.

Ponder Proposed Redistributions

The revenue numbers are through June so double the PIIE’s revenue estimate from 1.8 percent to 3.6 percent of revenue for the full year.

That’s not nothing, but recall that Trump proclaimed several time he would use that revenue to balance the budget.

Next consider this Tweet.

It's obvious bullshit @TaraBull808

Instead of collecting tariffs from consumers and redistributing some of it back, I propose not taxing consumers and small businesses with asinine tariffs in the first place. https://t.co/n3QdrayfQg

— Mike "Mish" Shedlock (@MishGEA) August 26, 2025

Mish “Instead of collecting tariffs from consumers and redistributing some of it back, I propose not taxing consumers and small businesses with asinine tariffs in the first place.”

The Important Question

I have little faith that they will stop them but we'll see.

— Tracey Ryniec (@TraceyRyniec) August 27, 2025

I am nearly 100 percent certain the en banc appeals court will strike down reciprocal tariffs.

En banc means a full court (11 justices) will hear the case as opposed to the normal 3-panel picked at random.

An en banc hearing of final arguments is underway now.

On May 28, I commented The Court Unanimously Strikes Down Trump’s Global Tariffs, Here’s Why

The word tariff is not even in the act. Nor are synonyms like duties.

Second, there is no emergency. An emergency is a sudden unexpected crisis. Trade deficits have existed for decades.

Third, there is no unusual or extraordinary threat. Trump has even imposed tariffs on nations with which we have no trade deficit including islands inhabited only by penguins.

Fourth, there is lack of a clear authorization by Congress to grant Trump such authority. The applicable principle involved is called “major question”.

The Tax foundation estimates the cost of Trump’s tariffs to be over $2 trillion. If that’s not a “major question” then what is?

A court stay has been in place since the lower-court ruling and the appeal is underway.

It would be amazing if the appeals court ruled for Trump. But the key question is how the Supreme Court will rule.

Recall that the Court ruled against Biden on student loans largely on the basis of the “major question”. There are even more reasons to strike the idea here.

However, although it’s constitutionally clear, a ruling against Trump is by no means certain.

Hypothetical Vote Count

The three liberal justices are certain to vote against Trump. That means we need two more.

Pair 1: Barrett and Roberts  
Pair 2: Barrett and Gorsuch
Pair 3: Gorsuch and Roberts

If I am correct, I think Barrett is already on board. I can’t help but think Roberts will go with the majority, and perhaps decide. 

If it’s pair 2, add Roberts for a 6-3 decision. The bigger the majority, the more cover for all of them.

A friend comments:

You are right to look to Gorsuch. His penchant for literalism, base your decision on your view of grammar not the intent of the folks passing the statute — his form of extreme “textualism” —makes him a possible vote. It’s very hard to read “emergency” in a condition that has existed for decades. But the problem with literalism is that English words have alternate meanings. There are alternate meanings to the Latin-origin word emergency, especially when placed in the relevant sentence.

I’m not at all convinced Barrett is “on board.” She’s a very sensible textualist, but like all conservatives, she has a healthy respect for the President’s power on international relations. For example, the India tariff, based on policy vis a vis Russia, is exactly the kind of action we judicial conservatives don’t want courts to touch. The judiciary is just not equipped to deal with international affairs. Still, I agree with you that she is the likeliest vote. All she has to do is say that “hey, I’m not deciding anything about the damn tariff at issue, I’m just saying that the Constitution gives the power to Congress and this statute does not delegate that power in this case.”

Roberts has shown balls before against Trump. And he is the likeliest 5th vote. He’s shown the ability to come up with innovative ways to advance conservative values. His Trump immunity decision was a masterful way to avoid a constitutional disaster while protecting the country against presidential coups. He’s extremely hard to predict. I’m worried about his disinclination to get involved in international affairs.

So expect an appeals court ruling against Trump. Then we will see if common sense, precedent, major questions, and emergencies apply to Republican presidents as well as Democrats.

Finally, I do not know if the Court will also look at decisions by Trump on Brazil and India.

Recall that Trump Slaps Brazil With a 50 Percent Tariff Over Treatment of Political Ally

And Trump just imposed a 50 percent tariff on India because India is buying Russian oil.

Finally, the Constitution gives tariff power to Congress.

Does the Court really want Trump [any president] to invoke tariffs for any damn reason he wants?

Regarding my friend’s comment on Barrett “All she has to do is say that hey, I’m not deciding anything about the damn tariff at issue, I’m just saying that the Constitution gives the power to Congress and this statute does not delegate that power in this case.”

That logically applies to all of the justices.

Regarding alleged “national security” the Court is much more likely to let tariffs on steel continue. That is a way out for the court.

Finally, for all the moaning about “activist courts”, it would take a very activist Court to side with Trump.

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